Priority
Companies Act
Costs, etc. in winding up
617. (1) All costs, charges and expenses properly incurred in the winding up of a company, including the remuneration of the liquidator, remaining after payment of—
(a) the fees and expenses properly incurred in preserving, realising or getting in the assets, and
(b) where the company has previously commenced to be wound up voluntarily, such remuneration, costs and expenses as the court may allow to a liquidator appointed in such voluntary winding up,
shall be payable out of the property of the company in priority to all other claims, and shall be paid or discharged in the order of priority set out in subsection (2).
(2) The costs, charges and expenses referred to in subsection (1) shall, subject to any order made by the court in a winding up by it, be liable to the following payments which shall be made in the following order of priority, namely:
(a) First — In the case of a winding up by the court, the costs of the petition, including the costs of any person appearing on the petition whose costs are allowed by the court;
(b) Next — Any costs and expenses necessarily incurred in connection with the summoning, advertisement and holding of a creditors’ meeting under section 587 ;
(c) Next — The costs and expenses necessarily incurred in and about the preparation and making of, or concurring in the making of, the statement of the company’s affairs and the accompanying list of creditors and the amounts due to them as required by section 587 (7);
(d) Next — The necessary disbursements of the liquidator, other than expenses properly incurred in preserving, realising or getting in the assets as provided for in subsection (1);
(e) Next — The costs payable to the solicitor for the liquidator;
(f) Next — The remuneration of the liquidator;
(g) Next — The out-of-pocket expenses necessarily incurred by the committee of inspection (if any).
(3) Subsection (4) applies in relation to a person who has provided funds to discharge any such costs, charges or expenses (other than costs or expenses referred to in subsection (2)(b) or (c)) as are referred to in subsection (1).
(4) Such person shall be entitled to be reimbursed to the extent of the funds so provided by him or her in the same order of priority as to payment out of the property of the company as would otherwise have applied to the costs, charges or expenses concerned.
Distribution of property of company
618. (1) Subject to the provisions of this Act as to preferential payments, the property of a company on its winding up—
(a) shall, subject to subsection (2), be applied in satisfaction of its liabilities pari passu, and
(b) shall, subject to such application, and unless the constitution of the company otherwise provides, be distributed among the members according to their rights and interests in the company.
(2) Nothing in subsection (1)(a) shall in any way affect any rights or obligations of the company or any other person arising as a result of any agreement entered into by any person under which any particular liability of the company to any general creditor is postponed in favour of or subordinated to the rights or claims of any other person to whom the company may be in any way liable.
(3) Subject to the provisions of this Part, in the case of a members’ voluntary winding up, the liquidator may, with the sanction of a special resolution of the company and any other sanction required by this Act, divide among the members, in specie or kind, the whole or any part of the property of the company (whether they shall consist of property of the same kind or not) and may, for such purpose—
(a) set such value as he or she deems fair upon any property to be divided in that manner, and
(b) determine how such division shall be carried out as between the members or different classes of members,
but so that no member shall be compelled to accept any shares or other securities on which there is any liability.
(4) In the case of such a voluntary winding up, the liquidator may, subject to the provisions of this Part and with the like sanction, vest the whole or any part of such property in trustees upon such trusts for the benefit of the members as the liquidator, with the like sanction, shall think fit, but so that no member shall be compelled to accept any shares or other securities on which there is any liability.
(5) In subsection (2)—
“liability” includes a contingent liability;
“person” includes a class of persons.
Application of bankruptcy rules in winding up of insolvent companies
619. (1) In the winding up of an insolvent company the same rules shall prevail and be observed relating to—
(a) the respective rights of secured and unsecured creditors,
(b) debts provable, and
(c) the valuation of annuities and future and contingent liabilities,
as are in force for the time being under the law of bankruptcy relating to the estates of persons adjudicated bankrupt.
(2) In particular, all persons who in any such case would be entitled to prove for and receive dividends out of the property of the company may come in under the winding up and make such claims against the company as they respectively are entitled to by virtue of this section.
(3) Subsection (1) of section 51 of the Bankruptcy Act 1988 shall apply in the winding up of an insolvent company and, accordingly, the reference in that subsection to the date of adjudication shall be read as—
(a) subject to paragraph (b), a reference to, as the case may be—
(i) the presentation of a petition for the winding up of the company by the court, or
(ii) the passing of a resolution for voluntary winding up,
and
(b) where, before the presentation of a petition for the winding up of the company by the court, a resolution has been passed by the company for voluntary winding up, a reference to the passing of the resolution.
Debts which may be proved
620. (1) Subject to the provisions of this section, in a winding up (subject, in the case of insolvent companies, to the application in accordance with the provisions of this Act of the law of bankruptcy) the following shall be admissible to proof against the company:
(a) all debts payable on a contingency; and
(b) all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages;
a just estimate being made, so far as possible, of the value of such debts or claims which may be subject to any contingency or which sound only in damages, or for some other reason do not bear a certain value.
(2) The value of such debts and claims as are made admissible to proof by subsection (1) shall, as far as possible, be estimated according to the value thereof at the date on which the winding up shall be deemed to have commenced by virtue of section 589 or 590 , as the case may be (referred to subsequently in this section as the “commencement date”).
(3) When any rent or other payment falls due at stated times and the order or resolution to wind up is made at any time other than at one of those times, the persons entitled to the rent or payment may prove for a proportionate part of it up to the commencement date as if the rent or payment accrued due from day to day but this is subject to subsection (4).
(4) Where the liquidator remains in occupation of premises demised to a company which is being wound up, nothing in subsection (3) shall affect the right of the landlord of such premises to claim payment of rent during the period of the company’s occupation after the commencement of the winding up.
(5) Subsection (6) applies to a debt or sum if all of the following conditions are satisfied in respect of it:
(a) it is a debt or sum certain;
(b) it is payable at a certain time or otherwise;
(c) interest on it is not reserved or agreed for; and
(d) it is overdue at the commencement date.
(6) The creditor may prove for interest on a debt or sum to which this subsection applies at a rate, not exceeding the appropriate rate, for the period up to the commencement date and beginning—
(a) if the debt or sum is payable by virtue of a written instrument at a certain time—at the time when the debt or sum was so payable, and
(b) if the debt or sum is payable otherwise — at the making of a demand in writing in respect of it, being a demand giving notice that interest will be claimed from the date of the demand until the time of payment.
(7) A creditor may prove for a debt not payable at the commencement date as if it were payable presently, and may receive dividends equally with the other creditors, deducting only thereout a rebate of interest at the appropriate rate computed from the declaration of a dividend to the time when the debt would have become payable according to the terms on which it was contracted.
(8) Unless the company’s constitution or the conditions of issue of the shares in question provide otherwise, dividends declared by a company more than 6 years preceding the commencement date, being dividends which have not been claimed within that period of 6 years, shall not be a claim admissible to proof against the company for the purposes of the winding up.
Preferential payments in a winding up
621. (1) In this section the “relevant date” means—
(a) where the company is ordered to be wound up, the date of the appointment (or first appointment) of a provisional liquidator or, if no such appointment was made, the date of the winding-up order, unless, in either case, the company had commenced to be wound up voluntarily before that date, and
(b) where paragraph (a) does not apply, the date of the passing of the resolution for the winding up of the company.
(2) In a winding up there shall be paid in priority to all other debts—
(a) the following rates and taxes:
(i) all local rates due from the company at the relevant date and having become due and payable within the period of 12 months before that date;
(ii) each tax assessable on, in relation to, or by the company under the Taxes Consolidation Act 1997 in respect of, or apportioned on a time basis to, a period ending on or before the relevant date, for which the tax concerned is due and payable, but the particular period (in respect of which priority under this subparagraph for the tax concerned is claimed) shall not be of more than 12 months’ duration;
(iii) any amount due at the relevant date in respect of sums which an employer is liable under Part 18D or Chapter 4 of Part 42 of the Taxes Consolidation Act 1997 and regulations thereunder to deduct from emoluments to which that Part or Chapter applies paid by that employer during the period of 12 months next ended on or before the relevant date reduced by any amount which that employer was under that Part or Chapter and regulations thereunder liable to repay during that period, with the addition of interest payable under section 991 of that Act;
(iv) any tax and interest for which the company is liable under the Value-Added Tax Consolidation Act 2010 in relation to taxable periods which shall have ended within the period of 12 months next ended before the relevant date;
(v) any local property tax that the company is liable to remit to the Revenue Commissioners under section 74 of the Finance (Local Property Tax) Act 2012 during the period of 12 months next ended before the relevant date and any interest payable in relation to that tax under section 149 of that Act;
(vi) an amount of local property tax payable, under section 16 of the Finance (Local Property Tax) Act 2012 , by the company at the relevant date to the extent that such tax is payable in respect of any one liability date (within the meaning of section 2 of that Act) falling before the relevant date and any interest payable in relation to that tax under section 149 of that Act,
(b) all wages or salary—
(i) whether or not earned wholly or in part by way of commission, or
(ii) whether payable for time or for piece work,
of any employee in respect of services rendered to the company during the period of 4 months before the relevant date,
(c) all accrued holiday remuneration becoming payable to any employee (or, in the case of the person’s death, to any other person in his or her right) on the termination of the employee’s employment before or by the effect of the winding up order or resolution,
(d) unless the company is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company—
(i) all amounts due in respect of contributions which are payable during the 12 months before the relevant date by the company as the employer of any persons under the Social Welfare Acts, and
(ii) all amounts due in respect of contributions which would have been payable under the provisions of section 13 (2)(d) of the Social Welfare Consolidation Act 2005 by the company as the employer of any persons in respect of any remuneration in respect of any period of employment during the 12 months before the relevant date even if such remuneration is paid after the relevant date,
(e) unless the company is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company, all amounts due from the company in respect of damages and costs or liability for damages and costs, payable to a person employed by it in connection with an accident, being an accident occurring—
(i) before the relevant date, and
(ii) in the course of the person’s employment with the company,
save to the extent that the company is not effectively indemnified by insurers against such damages and costs,
(f) all sums due to any employee pursuant to any scheme or arrangement for the provision of payments to the employee while he or she is absent from employment due to ill health,
(g) any payments due at any time by the company pursuant to any scheme or arrangement for the provision of superannuation benefits to or in respect of employees of the company whether such payments are due—
(i) in respect of the company’s contribution to that scheme or under that arrangement, or
(ii) in respect of such contributions payable by the employees to the company under that scheme or arrangement which have been deducted from the wages or salaries of employees.
(3) Subsection (2) is in addition to any other enactment providing for the priority of a particular debt or sum in a winding up.
(4) Subject to subsection (5), and notwithstanding anything in subsection (2)(b), the sum to which priority is to be given under subsection (2)(b) shall not, in the case of any one claimant, exceed €10,000.
(5) Where a claimant under subsection (2)(b) is a farm labourer who has entered into a contract for payment of a portion of his or her wages in a lump sum at the end of the year of hiring, he or she shall have priority in respect of the whole of such sum, or such part thereof as the court may decide to be due under the contract, proportionate to the time of service up to the relevant date.
(6) Where any payment has been made—
(a) to any employee of a company, on account of wages or salary, or
(b) to any employee or, in the case of his or her death, to any other person in his or her right, on account of accrued holiday remuneration, or
(c) to any employee while he or she is absent from employment due to ill health or pursuant to any scheme or arrangement for the provision of superannuation benefit to or in respect of him or her,
out of money advanced by some person for that purpose, the person by whom the money was advanced shall, in a winding up, have a right of priority in respect of the money so advanced and paid up to the amount by which the sum, in respect of which the employee or other person in his or her right, would have been entitled to priority in the winding up has been diminished by reason of the payment having been made.
(7) The foregoing debts shall—
(a) rank equally among themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions, and
(b) so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the company, and be paid accordingly out of any property comprised in or subject to that charge.
(8) Subject to the retention of such sums as may be necessary for the costs and expenses of the winding up, the foregoing debts shall be discharged forthwith so far as the assets are sufficient to meet them, and in the case of debts to which priority is given by subsection (2)(d), formal proof of them shall not be required except in so far as is otherwise provided by rules of court.
Supplemental provisions in relation to section 621
622. (1) Subject to subsection (2), in the event of a landlord or other person distraining or having distrained on any goods or effects of a company within the period of 3 months before the relevant date, the debts to which priority is given by section 621 shall be a first charge on the goods or effects so distrained on, or the proceeds of the sale thereof.
(2) In respect of any money paid under any such charge as is referred to in subsection (1), the landlord or other person shall have the same rights of priority as the person to whom the payment is made.
(3) For the purpose of section 621 any remuneration in respect of a period of holiday, or absence from work through good cause, shall be deemed to be wages in respect of services rendered to a company during that period.
(4) Subject to subsection (5), the Minister may by order alter the amount specified in section 621 (4).
(5) An order under subsection (4) may only be made, at a particular time (the “relevant time”), if it appears to the Minister to be appropriate to do so having regard to the changes in the value of money generally in the State that have occurred during the period beginning—
(a) on this Act’s passing, or
(b) if the powers under subsection (4) have previously been exercised, immediately after their last previous exercise,
and ending at the relevant time.
(6) The priority conferred by section 621 (2) shall apply only to those debts which, within the period of 6 months after the date of the advertisement by the liquidator for claims in at least 2 daily newspapers circulating in the district where the registered office of the company concerned is situated, either—
(a) have been notified to the liquidator, or
(b) have become known to the liquidator.
(7) In this section “relevant date” has the same meaning as it has in section 621 .
Unclaimed dividends and balances to be paid into a particular account
623. (1) Where a company has been wound up, and is about to be dissolved, the liquidator shall, in such manner as may be prescribed, lodge to such account as is prescribed by the Minister the whole unclaimed dividends admissible to proof and unapplied or undistributable balances.
(2) An application to the court by a person claiming to be entitled to any dividend or payment out of a lodgment made in pursuance of subsection (1), and any payment out of such lodgment in satisfaction of such claim, shall be made in the prescribed manner.
(3) At the expiration of 7 years after the date of any lodgment made in pursuance of subsection (1), the amount of the lodgment remaining unclaimed shall be paid into the Exchequer, but where the court is satisfied that any person claiming is entitled to any dividend or payment out of the moneys paid into the Exchequer, it may order that that dividend or payment be made and the Minister for Finance shall issue such sum as may be necessary to provide for that payment.
(4) Where moneys invested or deposited at interest by a liquidator form part of the amount required to be lodged, pursuant to subsection (1), to the account referred to in that subsection, the liquidator shall realise the investment or withdraw the deposit and shall pay the proceeds into that account.
The text in italics on this page is sourced from the Irish Statute Book and is re-published under the Licence for Re-Use of Public Sector Information made pursuant to Directive 2003/98/EC Directive 2013/37/EU of the European Parliament and of the Council on the re-use of public sector information transposed into Irish law by the European Communities (Re-Use of Public Sector Information) Regulations 2005 to 2015.